ZTE Profits Sink, But Sales Are Recovering ‘Rapidly’ After U.S. Ban

ZTE said net income fell 65% for the third quarter but business is bouncing back quickly

China telecom giant ZTE said business is recovering ‘rapidly’ after the end of a ban forbidding it to buy from U.S. suppliers. The logo of China's ZTE Corp., seen on a building in Nanjing in April.
Photo:
china stringer network/Reuters

ZTE Corp.
, the Chinese telecom giant rescued from collapse by the Trump administration, eked out a profit in its most recent quarter and said business is “rapidly recovering” after a ban on it buying from U.S. suppliers ended earlier this year.

The Shenzhen, China, company reported a net income of 564 million yuan ($81 million) for the third quarter, down 65% from the period a year ago.

The company said its business was bouncing back quickly following a devastating three-month ban on purchasing parts from U.S. suppliers this summer, which forced it to suspend operations. The U.S. Commerce Department ordered the ban in April after finding the company had broken terms of a deal resolving ZTE’s violations of U.S. sanctions on Iran and North Korea.

The order nearly destroyed ZTE, one of the biggest global vendors of telecom equipment and mobile phones in the U.S. It relies on semiconductors and other crucial components from U.S. companies including
Qualcomm Inc.
QCOM -0.85%

From the Archives

President Trump’s mixed messages about a plan to help controversial Chinese telecom giant ZTE has baffled Washington. WSJ's Shelby Holliday breaks down three reasons why lawmakers see the company as a threat. Illustration: Adam Falk (Originally published May 21, 2018)

After President Trump offered ZTE an olive branch in a tweet, the Commerce Department ordered a reversal of the ban in June—a move that turned ZTE into a bargaining chip in the wider U.S.-China trade dispute. In return, ZTE paid more than $1 billion in fresh penalties, carried out a purge of top leadership and agreed to the installation of a second compliance monitor.

ZTE on Thursday said it expects a loss for the full year of between 6.2 billion yuan and 7.2 billion yuan ($892 million and $1 billion).

“ZTE has fully restored its customer services,” the company said in a statement.

The company also said it disclosed a number of new patents related to the upcoming launch of fifth-generation, or 5G, wireless networks. The company said it had a lineup of 5G devices, including smartphones, a tablet and routers.